Updates on Government Affairs

Recently, the Medicare DMEPOS Market Pricing Program Act of 2012 was introduced by a bi-partisan committee headed up by Representative Tom Prince of Georgia as part of a wider healthcare reform effort. The purpose of this legislation is to revamp the way in which Medicare acquires its durable medical equipment, prothetics, orthotics, and related supplies, or DMEPOS. Currently, Medicare uses a competitive bidding program. This legislation would replace that program with a market pricing program like those used in auctions.

The legislation’s most immediate effect will be to terminate all contracts under the present Round One Rebid by July 1, 2013. It would apply to all of the equipment, prothetic, orthotics, and other supplies that the current DMEPOS system currently applies to.

Important Healthcare Reform Elements of the Medicare DMEPOS Market Pricing Program Act of 2012:

• Two product categories would be bid on in each geographic area. Eight other categories within that area would have their prices adjusted as a result of auctions held at the same time in similar geographic areas.
• The bidding areas are more homogeneous than metropolitan statistical areas, and smaller than them in size.
• Cash deposits will be required to ensure the good faith of participating bidders, and all bids will be considered binding.
• The bidding price will not be based on the median price of winners but on the clearing price. That is to say, it will be set by the bid and ask process of purchasers and sellers.
• The market pricing program will not only apply to the same products, it will be implemented on the same time table as the program currently in use.
• The current Medicare competitive bidding contracts and pricing system will remain in effect until July 1, 2012, and then terminate six months ahead of schedule, when the new market pricing program comes into effect.
• The market pricing program will create a working committee of representatives from the large medical devices and hospital systems industries to design the auction based on recommendations. This committee will be similar in nature to the current PAOC.

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